Futures on the dollar-denominated measure expiring in
December dropped 0.8 percent to 154,260 yesterday after the 30-stock Micex Index lost 1.8 percent in Moscow, trimming its
monthly gain to 9.7 percent, the most since May 2009. The
Bloomberg Russia-US 14 Index of Russian companies traded in New
York posted its biggest one-day retreat in more than five weeks,
as all but two stocks declined. The Micex may drop 0.8 percent
at the open today, according to Alfa Bank.

Copper dropped and nickel declined while crude, which along
with natural gas accounts for as much as about 17 percent of
Russia’s gross domestic product, slipped after China’s official
news agency said the country cannot play the role of “savior”
for Europe. American depositary receipts of Mechel, which
generated 19 percent of its 2010 sales from Europe, lost the
most in four weeks. Sberbank, Russia’s largest lender, fell
after Chief Executive Officer German Gref said the bank is
preparing for the government to sell its 7.6 percent stake.

“It’s been an extraordinary rally, though there is a
feeling that markets in the short term have gone a little bit
ahead of themselves,” said Martin Diggle, director of the $70
million Vulpes Russian Opportunities Fund, in a phone interview
from Geneva. “There remains a great deal of uncertainty about
how the European situation is going to play out, and even as
there has been optimism in recent weeks about a bailout, many
remain skeptical.”

Micex Drops

The Micex retreated yesterday after entering a bull market
on Oct. 27, having rallied more than 20 percent since touching
its 2011 low on Oct. 5. The RTS Index declined 2.9 percent to
pare its October advance to 17 percent, most since September
2009. The RTS Volatility Index, which measures expected swings
in the index futures, increased 4.4 percent to 47.92 points, for
its biggest two-day advance since Oct. 4.

Gazprom, the world’s biggest natural gas exporter, plunged
6.5 percent to $11.61 on speculation demand will falter after
the biggest monthly gain in more than two years. Brent oil for
December settlement slipped 0.3 percent to $109.56 on the
London-based ICE Futures Europe exchange. Gazprom shares in
Moscow dropped 3.1 percent to 179.35 rubles, or the equivalent
of $5.91. One ADR represents two ordinary shares.

Mechel Plunges

Mechel, Russia’s largest coal producer for steelmakers,
plunged 8.8 percent, the most in four weeks, to $13.14, its
first decline in four sessions. Shares in Moscow fell 2.4
percent to 405.90 rubles, or the equivalent of $13.39. The
Bloomberg Russia-US 14 Index dropped 5.3 percent to 999.39 as
every stock on the gauge fell except the ADRs of OAO Rostelecom,
Russian dominant fixed-line operator, and OAO Polyus Gold.

European governments, which convene Nov. 3-4 in Cannes,
France for the Group of 20 summit, are finding pledges of hard
cash are difficult to obtain as European banks are reluctant to
lend funds to one another to prevent the crisis from worsening.
Russia may lend Europe as much as $10 billion through the
International Monetary Fund, Arkady Dvorkovich, the Kremlin’s
top economic aide, told reporters in Moscow yesterday.

“It’s really important to us that Europe remains stable,”
said Dvorkovich. “If Europe becomes unstable, then the Russian
economy will enter a period of instability.”

Sberbank

Sberbank fell the most in four weeks, declining 7 percent
to $10.75 in New York after Gref said the bank may start
preparing for Russia’s central bank to sell its stake once the
share price approaches 100 rubles. Gref made the comment in a
broadcast on Russia’s state television after business hours on
Oct. 28. Sberbank fell 4 percent on the Micex to 82.03 rubles,
or the equivalent of $2.71. One ADR represents four ordinary
shares.

OAO GMK Norilsk Nickel, Russia’s biggest mining company and
the world’s largest nickel producer, slumped 6.2 percent to
$19.25 in New York after the company completed a $4.5 billion
share buyback program on Oct. 28. Shares in Moscow fell 2.7
percent to 5,966 rubles, or the equivalent of $196.66.

Norilsk began buying back as much as 7.7 percent of its
stock on Sept. 28. The results of the buyback will be announced
this week, Erzhena Ischenko, a company spokeswoman, said by
phone on Oct. 28.

U.S. Stocks

Standard & Poor’s GSCI index of 24 raw materials slipped
0.7 percent to 647.96 as copper futures for December delivery
retreated 2 percent to close at $3.632 a pound on the Comex in
New York while nickel lost 0.6 percent to settle at $19,575 a
ton on the London Metal Exchange. Gold futures dropped the most
in a week, losing 1.3 percent, to settle at $1,725.20 an ounce
on the Comex.

Oil, Russia’s biggest export earner, declined for a third
day in four, dropping 0.1 percent to settle at $93.19 a barrel
on the New York Mercantile Exchange. Crude oil surged the most
in 29 months in October. Urals crude, Russia’s chief export
blend, lost 1.1 percent to $108.32. Oil and natural gas
contribute about 40 percent of the government’s budget revenue.

The Market Vectors Russia ETF, a U.S.-traded fund that
holds Russian shares, and the Bank of New York Mellon Russia ADR
Index both lost 5 percent, most since Sept. 30. The Market
Vectors ETF closed at $30.45, while New York Mellon Russia ADR
finished trading at 748.24.

The Micex has lost 11 percent in 2011 and trades at 5.4
times analysts’ earnings estimates for member companies. That
compares with a 16 percent slide for Brazil’s Bovespa index,
which trades at 10.4 times estimated earnings, according to data
compiled by Bloomberg. The Shanghai Composite Index trades at
11.5 times estimated earnings, and the BSE India Sensitive Index
has a ratio of 15.1.